RESTRICTED  WORLD TRADE  
ORGANIZATION  S/C/W/254 
9 February 2005 
 
 (05-0539) 
Council for Trade in Services Original:   English 
  
 
COMMUNICATION FROM NORWAY  
 
Review of MFN Exemptions 
 
Maritime Transport Services Sector  
 
Questions from Norway regarding MFN exemptions  in respect of Maritime Transport Services  
 
  The following communication, dated 8 February  2005, from the delegation of Norway is 
being circulated to the Members of the Council for Trade in Services.  
 
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I. INTRODUCTION 
1. The Council for Trade in Services is currently co nducting a review of all MFN exemptions as 
mandated by Article II.2 of the GATS and the Annex on Article II Exemptions.    
2. In this context, Norway makes particular refere nce to paragraph 4(a) of the Annex which lays 
down that the Council for Trade in Services Council, in a review shall: 
(a) examine whether the conditions which cr eated the need for the exemption still 
prevail; 
3. Norway’s point of departure is that there should be few or no MFN exemptions1.  However, 
we recognise that in some cases MFN exemptions ar e necessary.  MFN exemptions must, however, be 
concisely drafted, sufficiently circumscribed, and be limited to what is necessary to fulfil their 
purpose.  Where the conditions that created the need  for the exemption no lo nger exist, the Member 
concerned should bring itself into conformity with paragraph 1 of Article II of the GATS. 
4. Norway welcomes this opportunity to present horiz ontal as well as Member specific questions 
regarding MFN exemption in respect of Maritime Transport Services.  Norway would appreciate 
receiving answers to these questions in advance of th e meeting on 23 February, if possible, or orally 
during the meeting or in writing thereafter. 
II. BACKGROUND 
5. As a result of the Uruguay Round and the nego tiation in the Negotia ting Group on Maritime 
Transport Services (NGMTS), the Council for Tr ade in Services adopted on 28 June 1996 the 
Decision on Maritime Transport Services2 (“the 1996 Decision”), which suspended the negotiations 
until the commencement of comprehensive negotiations on services. 
                                                      
1 See Norway’s general policy statement in S/CSS/W/59 
2 S/L/24 S/C/W/254 
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 6. In the 1996 Decision the following is stated in paragraphs 4, 5 and 6: 
“4. Article II of the GATS and the Annex on Article II Exemptions, including the 
requirement to list in the Annex any measures inconsistent with most-f avoured-nation treatment 
that a Member will maintain, shall enter into fo rce for international shipping, auxiliary services 
and access to and use of port facilities at the same time as the conclusion of the negotiations 
referred to in paragraph 1.  During the course of negotiations the effects of the continued 
suspension of Article II will be kept under re view by the Council for Trade in Services. 
 5. Paragraph 4 of this Decision shall not appl y to any specific co mmitment on maritime 
transport services which is inscri bed in a Member's Schedule.   
 
6. Notwithstanding Article XXI, a Member may improve, modify or withdraw all or part of 
its specific commitments in this sector, during a period of sixty days the end of which shall 
coincide with the conclusion of the negotiations  referred to in paragraph 1.  During the same 
period, Members shall finalize their positions re lating to MFN Exemptions in this sector.” 
 
7. The 1996 Decision leaves maritime transport servi ces in a different a nd less defined position 
in respect of MFN exemptions compared to other services sectors in the WTO/GATS. 
8. Many Members have not yet entered commitments for maritime transport, and they may also 
have used the opportunity to postpone the inscripti on of MFN exemptions as provided for in the 1996 
Decision. Members that have entered commitments in their schedules and listed MFN exemptions 
may still change their schedules and MFN exempti ons.  Members without commitments and with 
MFN exemptions also have the right to adjust their MFN exemptions.  This implies that an examination of the MFN exemptions for maritime transport cannot be based on a defined and bound 
set of MFN exemptions. 
9. At the present stage we have decided not to put questions to Members without scheduled 
commitments for maritime transport, but we reserve th e right to revert with further questions later. We 
thus only put questions to some countries with scheduled commitments for maritime transport, and 
with MFN excemptions that have not been withdrawn in the offers tabled in the ongoing round of negotiations. Furthermore, we do not ask questions in  respect of MFN exemptions that appear fully 
described and in accordance with the obligations.  
III. GENERAL AND HORIZONTAL QUESTIONS 
10. The document by the Secretariat (Compilation Of Article II (MFN) Exemptions By Sector - 
Informal Note by the Secretariat), JOB(04)/114 de tails the various MFN exemptions in respect of 
Maritime Transport Services on pages 94 to 112.  (References to page numbers end entry numbers 
below are to pages and entries in this document.) 
11. A number of the MFN exemptions follow the same  pattern and broadly fall into the following 
categories: 
(a) Exemptions for coastal cabotage or interna tional transport based on existing or future
 
bilateral or multilateral agreements which grant cabotage and/or liner trade rights 
and/or international cargo sharing rights to trading partners  
(b) Exemptions for various forms of “cargo sharing” based on the UN Convention on a 
Code of Conduct for Liner Conferences   S/C/W/254 
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 (c) Exemptions for maritime transport generally, relating to an unspecified content of any 
future law, decree, regulation, etc. 
12. An MFN exemption is only to be entered when five points are described and included: the 
sector, a description of the measure, the country to  which it applies, the intended duration, and the 
condition creating the needs.  These points are also reflected in the heading of the MFN exemption 
lists. 
13. A general question arises in respect of MFN ex emptions that refer to “future” international 
agreements (see paragraph 11 a. above), as other trading partners do not know the scope of the 
exemption, and the level of discrimination may change in the future. An MFN exemption, which covers future agreements, may in fact be consider ed as a circumvention of the procedure for entering 
a new MFN exemption.  This procedure is regulat ed by Article 2 in the Annex on MFN exemptions, 
which in turn refers to article IX in the WTO agre ement.  A strict procedure is foreseen for entering 
new MFN exemptions.  An MFN exemption, which provides for an open ended and unspecified expansion of the volume within it, may be consid ered as an evasion of the foreseen procedure for 
entering new MFN exemptions. Members may wish to  discuss at a horizontal level the desirability 
and permissibility of such exemptions. 
14. MFN exemption on cargo reservation under the UN Convention on a Code of Conduct for 
Liner Conferences is stated to apply to signatories to the UN Convention (see paragraph 11 b. above).  
Norway is a signatory to this convention.  Howe ver Norway does not recognise or allow, according to 
our competition law, cargo sharing to take place for transport of cargo between Norway and other 
countries.  Such MFN exemptions cannot apply to Norway. The Norwegian competition policy is 
based upon the legislation of the European Uni on, as committed through the European Economic 
Area Agreement. 
15. In respect of Members having taken an MFN exemption for “cargo sharing” based on the UN 
Convention on a Code of Conduct for Liner Conferences,  we also question how this MFN exemption 
is considered to be in accordance with the terms of  ratification of the Convention by the signatories.  
The Convention does not apply to total trade volumes, but only to cargoes transported within liner 
conferences. 
16. In respect of Members having taken an unspeci fied MFN exemption for maritime transport 
generally (see paragraph 11 c. above),  relating to an unspecified cont ent of any future law, decree, 
regulation etc., we ask for clarifications as to content of such laws etc., their possible scope, the countries such an MFN exemption applies to, and any further information that may be provided. 
IV. QUESTIONS TO SPECIFIC MEMBERS 
17. China:
  We request China (JOB(04)/114 page 98, 1st entry) to specify the States with which 
bilateral agreements have been entered into, in par ticular where agreements gi ve “Mode 3” privileges.  
The content of the agreements should also be specified.  
18. Furthermore we request China to explain the need for the MFN exemption for cargo sharing 
provisions in bilateral agreements, as there is no restriction which the exemption may relate to 
(JOB(04)/114, page 98, 2nd entry).  China has scheduled “None” with respect to cross border supply 
both in the Market Access and National Treatment colu mns for international maritime transport.  This 
implies that there are no limitations and no restrictive measures apply with regard to MFN.  According to GATS Article XVI.1 China shall acco rd services and service suppliers of any other  
Member treatment no less favourable than that  provided for under the terms, limitations and 
conditions agreed and specified in its Schedule.  According to  GATS Article XVII.1 China shall 
accord to services and service suppliers of any ot her Member treatment no less favourable than it S/C/W/254 
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 accords to its own like services and service supplie rs.   The guidelines for scheduling of specific 
commitments (S/L/92, paragraph 21) states that “ Where an MFN exemption has been granted for a 
measure, a Member is free to deviate from its Artic le II obligations, but not from its Article XVI and 
Article XVII commitments” and “it is not possible for a Member to accord less favourable treatment 
to certain Members than that  specified in its schedule”. 
19. Cuba:
  In respect of the MFN exemption for bila teral agreements (JOB (04)/114 page 100) we 
would welcome a list specifying the States with whic h such bilateral agreements have been entered 
into, and the content of these agreements. 
20. Jamaica:   With reference to the points rai sed in paragraph 14 and 15 above on  MFN 
exemptions on cargo reservation under the UN  Convention on a Code of Conduct for Liner 
Conferences we ask Jamaica if the cargo reser vation provision (JOB(04)/114, page 102) is 
implemented for liner conference trades between Jamai ca and any other country, and if this is the case 
to specify which countries.  
21. Thailand:   The MFN exemption on VAT collection (JOB(04)/114, page 108 1st entry) 
contains an element of reciprocity.  In this respect we would like to endorse the comments put 
forward by Hong Kong, China, in document S/ C/W/247 page 2.  An MFN exemption based on 
reciprocity between two Members is contradicting the basic principle of WTO that a Member must 
grant unconditionally to any other Member treatme nt no less favourable than that accorded by the 
specific commitment inscribed in its schedule, notwithstanding any MFN exemption.  Please 
comment as appropriate and specify the countries that receive treatment “more favourable” than others. 
22. In addition, we would appreciate an explanatio n of the maritime services that are covered by 
this MFN exemption.  Are freight rate costs include d in the term, or does it only apply to the cost of 
selling and marketing maritime services? 
23. Turkey:
  The three MFN exemptions (JOB(04)/114 , page 111) cover all transportation in 
general.  We ask for them to be split between tran sport types and modes of supply, in order for the 
need for these MFN exemptions to be considered separately.   
24. We also refer to the question to Thailand regarding MFN exemptions based on reciprocity.  
Please comment as appropriate and specify the coun tries that receive treatment “more favourable” 
than others. 
25. Venezuela:   Venezuela has inscribed a general MFN exemption for maritime transport based 
on reciprocity (JOB(04)/114, page 112, 1st entry).  We refer to the question to Thailand regarding 
MFN exemptions based on reciprocity.  Please commen t as appropriate and specify the countries that 
receive treatment “more favourable” than others. 
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